Countrywide's Ex-Chief Mozilo Charged with Fraud

The Securities and Exchange Commission today (June 5) charged Anthony Mozilo, former chief executive of the former Countrywide Financial (now part of Bank of America) with securities fraud. Mozilo and former president David Sambol and former chief financial officer Eric Sieracki falsely assured investors that Countrywide was primarily a prime quality mortgage lender that had "avoided the excesses of its competitors," according to the agency. In addition, Mozilo was charged with insider trading for dumping his shares for nearly $140 million in profits while in possession of non-public information. The three executives had acknowledged internally that the company was writing increasingly risky loans, but this was not disclosed to investors, according to the agency.

By realnews

And now we know why. Good work, but no one should jump for joy just yet. The reason? This is a civil action. The FBI continues its criminal investigation. And on that we've been hearing that Mozilo will agree, (how nice) to a, single year in jail for criminal "misdeeds."

The FBI does not leak the kind of info stated above. In fact the FBI has NO SAY in how long a person stays in jail on a plea. Zero. Nothing. Nada.

It is the Probation Officer, their report, the judge and the US Sentencing guidelines that determine length of jail time for a defendant in a plea deal.

The Justice Department has a 60 day window to file criminal charges against Mozilo. The 60 day window starts on the day the SEC charges were filed. It appears unlikey that Mozilo will be charged criminally. He was very active politically and if he is charged with crimes he could implicate many prominent politicians in crimes, including Senator Dodd. Also, top Wall Street executives are likely moving heaven and earth to derail efforts to prosecute Mozilo. If Mozilo is charged with crimes there will be enormous political pressure to indict the top Wall Street executives who financially raped the country.

Response to post #1: The Securities and Exchange Commission is a civil agency. However, there are often criminal investigations paralleling an SEC civil probe. I don't know if there is in this case. Best, Don Bauder

Response to post #3: According to my preliminary reading, Mozilo didn't dump anywhere near as much stock as John Moores did in the Peregrine scam, and Moores was not even charged civilly, much less criminally. Of course, the SEC lawyer who handled the Peregrine matter went to work for the law firm that Moores had hired to give himself a whitewash. Best, Don Bauder

John Moore's Peregrine stock sales were scheduled out in advance in an SEC filing two years before the first documented instance of fraud at Peregrine. He identified both the number of shares he would sell and the date he would sell the shares in the SEC filing. Because of this fact, it has been impossible to prove that his decision to sell his shares was based on insider information. I have followed this case closely because I lost money from the Peregrine fraud and have read several of the court filings. There is no evidence whatever that I have read that connects Moores to the Peregrine fraud. There are no E-Mails, no memos, nothing. He may well have been involved in the fraud, but there is no evidence of it.

It is my understanding that the SEC must suspend its investigation of Mozilo until the Justice Department makes a decision on whether to charge him with crimes. If the SEC requires Mozilo to provide records and testimony to investigators or in an administrative hearing, his right against self-incrimination would be violated and jeopardize any future criminal charges. Gary Aguirre would likley be able to describe what is going on behind the scenes.

Response to post #9: I disagree strongly. There is plenty of evidence that Moores and other board members knew what was going on. This is available in reports of meetings that have been presented in civil suits. The president's regular reports to the board clearly indicate that the board was briefed on what was going on. I have written on this at great length, and you can pick up those Reader stories through the Reader search function. Best, Don Bauder

If the SEC requires Mozilo to provide records and testimony to investigators or in an administrative hearing, his right against self-incrimination would be violated and jeopardize any future criminal charges.

The records could secured by the FBI with a subpeonea or court order, so that does not really add up.

As for compelled testimony during a civil proceeding, that does make sense, but typically you would invoke the 5th Amendment if criminal charges were being considered.

Many news sources are reporting that Mozilo is under criminal investigation. Reuters is on top of this story with inside sources and is reporting that while Mozilo is under criminal investigation, investigators have found no evidence thus far that he committed crimes. A legal expert on one of the business channels said the Justice Department has 60 days to file criminal charges once the SEC brings a civil action against an executive. If no crimes have been identified thus far, and the Justice Department has only 60 days to file charges, I do not see how Mozilo will face criminal charges. I am not a lawyer, but I also do not see how criminal and civil charges could be pursued against Mozilo at the same time.

Response to post #15: The SEC charges that Mozilo internally used the word "toxic" to describe a Countrywide mortgage product. Also, he said in an internal email that the company was "flying blind" in certain strategies. But publicly, the company boasted of its risk management skills and claimed that it had not made the dangerous steps that other mortgage firms had. That itself may be fodder for criminal investigators. Best, Don Bauder

The SEC charges that Mozilo internally used the word "toxic" to describe a Countrywide mortgage product. Also, he said in an internal email that the company was "flying blind" in certain strategies. But publicly, the company boasted of its risk management skills and claimed that it had not made the dangerous steps that other mortgage firms had. That itself may be fodder for criminal investigators.

It sure can be enough.

They are inconsistent statements-and that can always be used as a basis for criminal prosecution.

In fact the judge givesa jury instruction that says just that-inconsistent statements are a sign of deception, because both inconsistent statements cannot be true.

I have a feeling this guy is going to be going to prison, how long, who knows.

Response to post #19: The pols like to make a quick exit, but sometimes the ties to the crooks are all too public. The SEC bows to political pressure, as well as to pressure from the big Wall Street law firms representing white collar thieves. There is plenty of corruption in U.S. attorney's offices, too, as we have seen. Best, Don Bauder